What is the term for the amount the insured must pay in a loss before any payment is due?

What is the term for the amount the insured must pay in a loss before any payment is due?

• A. Premium
• B. Deductible
• C. Copayment
• D. Co-insurance

Answer: (B)

The term that describes the amount the insured must pay out of pocket for a loss before the insurance company begins to cover the remaining costs is known as a deductible. This amount is subtracted from the total claim amount, so the insured is responsible for the initial portion of the loss. For example, if a policy has a deductible of $1,000 and the total loss is $5,000, the insured would pay the first $1,000, and the insurance would cover the remaining $4,000. Premium refers to the regular payment made to maintain an insurance policy and does not relate to claims or out-of-pocket expenses. A copayment is typically a fixed amount paid for specific services in health insurance, while co-insurance involves splitting the cost of a claim between the insured and the insurer after the deductible has been met. Therefore, deductible is the appropriate term for this type of cost-sharing in insurance policies.

The term that describes the amount the insured must pay out of pocket for a loss before the insurance company begins to cover the remaining costs is known as a deductible. This amount is subtracted from the total claim amount, so the insured is responsible for the initial portion of the loss. For example, if a policy has a deductible of $1,000 and the total loss is $5,000, the insured would pay the first $1,000, and the insurance would cover the remaining $4,000.

Premium refers to the regular payment made to maintain an insurance policy and does not relate to claims or out-of-pocket expenses. A copayment is typically a fixed amount paid for specific services in health insurance, while co-insurance involves splitting the cost of a claim between the insured and the insurer after the deductible has been met. Therefore, deductible is the appropriate term for this type of cost-sharing in insurance policies.